- Hong Kong crypto ETFs will be ‘lucky’ to attract $500 million in total assets under management, according to Bloomberg Senior ETF Analyst Eric Balchunas.
- The Hong Kong ETF market is tiny compared to the U.S., and Chinese locals cannot officially buy these crypto ETFs.
- While approval of crypto ETFs in Hong Kong is positive, Balchunas says it’s “child’s play” compared to the much larger U.S. ETF market.
Hong Kong recently approved the first spot bitcoin and ether exchange-traded funds (ETFs). However, some analysts believe the new crypto ETFs will attract limited investment compared to the much larger US market.
Bloomberg Analyst Expects Modest Flows
Eric Balchunas, a senior ETF analyst at Bloomberg, said the Hong Kong crypto ETFs will likely only attract around $500 million in total assets under management. He pointed out that the overall ETF market in Hong Kong is small, and mainland Chinese investors can’t officially buy the new products.
While Balchunas sees the ETF approvals as a positive development, he believes the Hong Kong crypto ETF market is insignificant compared to the mammoth US market. US bitcoin ETFs have already attracted around $30 billion in investment this year.
Key Differences Between the Markets
A key distinction is that Hong Kong approved spot ether ETFs, while the US has not yet done so. The US Securities and Exchange Commission is expected to decide on Ethereum-based ETFs by May.
Another major difference is that leading US ETF providers like BlackRock and Fidelity offer bitcoin ETFs, while the Hong Kong funds come from smaller players.
Balchunas said the Hong Kong ETFs will likely have much wider spreads and higher fees than the US products. For example, BlackRock charges only 0.25% as a sponsor fee for its bitcoin ETF.
Conclusion
While the Hong Kong ETF approvals represent an incremental step forward for crypto adoption, analysts caution that the market impact will be modest compared to the burgeoning bitcoin and ether ETF ecosystem in the US.
